Most people would like to build up a healthy rainy day fund, but many struggle to get started and structure their saving.
If you haven’t been a saver before, it can be a little intimidating to commit a large chunk of your monthly income to a savings account. It doesn’t have to be difficult though. By planning your savings out, you can store a comfortable amount away regularly with little impact on your day-to-day spending habits.
Here are some simple steps to take before you start saving…
1. Set A Target
It can be difficult to save with no real purpose. Even if you are putting together a “rainy day fund”, it’s useful to give your target a name so that you can clearly visualise why you are saving and how much you will need to save. If you set yourself a time limit to save too, you can break down your target to see how much you will need to save monthly, making a large amount much more manageable.
2. Make Room For Savings
Once you know exactly how much you’re looking to save and the time period you’d like to do it in, you need to make sure you are able to afford the monthly payments. Catalogue your monthly expenditure, and compare it to your income. If you don’t have enough spare cash to be able to save the amount you’d like, you may need to cut back on certain things you could be spending less on. Making a note of your expenditure is useful even if you aren’t looking to save, as you may be able to identify areas of your spending that are unnecessary.
3. Create A Culture of Saving
You should clearly separate your savings from your “everyday” cash, ideally by opening a savings account. You need to resist the temptation to dip into your savings pot, or remove the chance of forgetting to save. You can set up a standing order to automatically transfer savings from your current account to your savings account, allowing you to save without having to think about it.
4. Assess How You’re Doing
Check your savings progress every few months, and if you are able to, you can contribute more money to your savings account. If you’re ahead on your goal, you may want to adjust your monthly standing order to give you more money to spend on leisure throughout the month.
Savings accounts and Isas can be confusing. If you would like advice on the best savings account for you, please get in touch – we’re happy to help.